SEED breeders Pannar and DuPont-owned Pioneer have dismissed as "blatantly incorrect" recent statements that their merger would push up the price of seed in SA.
The Competition Commission and independent economist Mike Schussler recently referred to economic evidence that the transaction would result in a 12% rise in the price of hybrid maize seed.
The merged entity said such comments were not only patently incorrect, but also misleading and did not reflect the evidence in the proceedings before the Competition Tribunal or the Competition Appeal Court.
"It was common cause in the proceedings that Pannar will benefit from lower trait fees as a direct result of the transaction and this fact, in conjunction with the price remedy, would have a direct impact on post-merger price reductions," the company said.
Mr Schussler told reporters on Friday the companies had admitted the planned merger would create a one-off jump of 12% in seed prices, saying the additional expense would be passed on to consumers through higher maize meal, cereal and bread prices.
Last month, the competition commission filed its application for leave to appeal against the decision by the Competition Appeal Court. Commissioner Shan Ramburuth said in a founding affidavit in support of the application the appeal court erred in its judgment. The commission initially prohibited the deal, expressing concerns over the creation of a duopoly by reducing the number of market players from three (Pioneer, Pannar and Monsanto) to two (Pioneer and Monsanto).
The commission argued that the increased concentration in the market could lead to an increase in prices. The matter was taken on review at the Competition Tribunal, which confirmed the prohibition, but the decision was overturned by the Competition Appeal Court, which argued the prohibition of the merger would have led to the demise of Pannar, together with the loss of a valuable resource, namely the germplasm developed by the company.
Pannar and Pioneer said on Friday the appeal court accepted that, at worst, prices post-merger could rise 1.6%. They also said the appeal court found the benefits of the merger would "swamp" short-term price effects.
vissera@bdfm.co.za
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